Image source: Teradata.
Thursday morning, Teradata (TDC +1.77%) reported results for the second quarter of 2015. The maker of data analysis tools missed analyst targets on both the top and bottom lines and lowered its guidance for the full year accordingly. In response to the bad news, Teradata shares were down 14.5% at 10:50 a.m., pushing it to levels not seen since the summer of 2010.
For the second quarter, the Street was looking for earnings of roughly $0.56 per share, down from $0.72 per share in the year-ago period. Sales were seen falling roughly 4% to land at $651 million.
So analysts always expected falling trends in this report. However, they never called for drops of this magnitude. Teradata reported adjusted earnings of $0.53 per diluted share on $623 million in top-line revenue. The revenue result was particularly disappointing, falling below even the most pessimistic analyst estimates.
Currency exchange trends played a part, of course. As reported, sales fell 8% year over year; on a constant-currency basis, the drop would have been just 2%. But management pointed to delays of several large orders as a main driver of these low sales, alongside a general trend toward longer-term contracts and therefore slower sales cycles.
Revenue losses were fairly consistent across Teradata's two reportable segments, with an 8% drop in the larger data and analytics business nearly matching the 9% fall under marketing applications.
Adjusted gross margins stopped at 54.3%, down from 56.1% in the second quarter of 2014. Further down the income statement, this negative trend only increased; adjusted net margins fell from 16.9% to 12.2%.
Teradata took a $340 million non-cash charge in the quarter to account for lower goodwill related to the marketing applications business unit. That charge was backed out of non-GAAP earnings, and thus wasn't a factor in comparisons to analyst estimates.
Looking ahead, management lowered the midpoint of its full-year revenue guidance from approximately $2.70 billion to $2.61 billion. Total 2015 earnings are seen falling roughly 18% to $2.35 per share, down from original guidance of $2.50 per share. The current Street view calls for earnings of $2.44 per share on $2.66 billion in full-year sales, so Teradata's guidance moved from optimistic to pessimistic with this update.
In prepared press statements, Teradata CEO Mike Koehler expressed confidence in better days ahead.
"With better aligned and focused end-to-end resources, we are rapidly advancing our growth initiatives and improving operating efficiencies," Koehler said. "We remain confident in our industry-leading solutions and competitive positions in the markets we serve, and have a number of actions in progress to better position Teradata in 2016 and beyond."
